TNAG-0391-FCO40-437-Restriction-on-cotton-textile-exports-from-Hong-Kong-to-the--1973 — Page 56

SUMMARY NOTE

Reference

да

RE

REOLINED IN

TAY Ho, & BEC 573

CARRY OVER OF UNUSED 1973 QUOTAS IN 1974

(attached)

(A-1 3/x4

Mr Mills has now replied to Mr Hope's letter which as you will recall rejected Hong Kong's concept of an eighteen month period for textile quotas. This would have covered the period 1 January 1973 to 30 June 1974.

Nr Mills' letter sets out the various reasons why

the UK for these eighteen months to be regarded as one period. The DTI consider most of these to be exaggerated. However they do not intend to take up the individual points in the letter. Fortunately Mr Mills has enclosed a table showing shipments per square yard of textiles in 1972 and 1973. Because of the distance involved the Hong Kong figures go up to the end of October, two months longer than our own. These show an increase over the year as a whole and also demonstrate that last year maximum shipments fell in December which showed considerable increase. On these figures it looks as though the short fall in the 1973 shipments will be nothing like the 90 million square yards originally estimated by the DTI and may well be considerably under 50% of that figure.

HKK 6/ Jus/ Hong Kong considers it beneficial to both themselves and

3. The DTI (Miss Lowke) maintain that there is no reason for us to give any concessions to Hong Kong. Our agreements show clearly that the normal carry over is 10%. Any carry over enables considerable manipulation by the exporter who can adjust his exports according to market trends and market prices

- eg with- holding exports to inflate prices. However, having said this, the DTI are prepared to raise the percentage available for carry over for this year from 10 to 15% on an ad hoc basis. On the most recent figures this will mean a carry over of 40 million square yards as compared with 27 million square yards at 10%. On the figures provided by Mr Mills extrapolated to the end of the year, this should enable a 100 carry over of the outstanding quota. In practical terms this should therefore give Hong Kong what they want. I think it would be difficult for us to argue against the DTI on this. Hong Kong have quite knowingly and deliberately taken advantage of the extension of the 1973 arrangements to the end of June to "pull a fast one". Whilst we could argue with the DTI to be more accommodating, in practice this will no longer be necessary and we should be on very weak ground challenging the principle that an agreement is an agreement.

4. Mr Dorward will be seeing Miss low on Wednesday morning, 28 November, when this matter will no doubt be raised. With luck it should be settled before your own meeting with hr Dorward.

27 November 1973

村

M Goodfellow

Goodr

DD 145177 219242 500M 4/73 GM 3643/2